Model train firm Hornby issues profit warning

TOY firm Hornby is steaming into the red for its current financial year after trading was buffeted by lengthy supply chain difficulties with a Chinese model railway maker.

Shares in the group reversed 3.7 per cent to 77.5p on yesterday’s profits warning. Hornby said it will pay the Chinese supplier £600,000 for a “managed exit” from their agreement next July, but noted that the impact on sales will wipe out its underlying profits.

A further currency hit will leave it with £1 million of losses overall for the year to end-March, the Margate-based group said.

Hornby, whose brands also include Airfix and Scalextric, said sales over Christmas were “reasonably strong”. Chairman Roger Canham said: “I am confident that this draws a line under this painful period of the group’s recent trading.

“From here we will have a more solid supply base to grow our market share in the UK and European markets.”

Hornby’s products for the year ahead include model kits to commemorate the First and Second World Wars.